IDEAS home Printed from https://ideas.repec.org/a/ntj/journl/v70y2017i1p185-204.html
   My bibliography  Save this article

Using the Two-Period Model to Understand Investment in Human Capital

Author

Listed:
  • M. Daniele Paserman

Abstract

In many textbooks, the decision to invest in human capital is presented in terms of the present discounted value of the lifetime stream of costs and benefits associated with the investment. I argue that this approach, while delivering some useful insights, also conflates subjective discount rates and market interest rates, obfuscates the role of credit market imperfections, and makes difficult the analysis of policy interventions and the effects of external shocks on human capital investment. I show instead how a simple two-period model can deliver the main insights about investment in human capital and is flexible enough to be used to model a wide variety of policy interventions.

Suggested Citation

  • M. Daniele Paserman, 2017. "Using the Two-Period Model to Understand Investment in Human Capital," National Tax Journal, National Tax Association;National Tax Journal, vol. 70(1), pages 185-204, March.
    • Handle: RePEc:ntj:journl:v:70:y:2017:i:1:p:185-204
    DOI: 10.17310/ntj.2017.1.08
    as

    Download full text from publisher

    File URL: https://doi.org/10.17310/ntj.2017.1.08
    Download Restriction: Access is restricted to subscribers and members of the National Tax Association.
    File URL: https://libkey.io/10.17310/ntj.2017.1.08?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ntj:journl:v:70:y:2017:i:1:p:185-204. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: The University of Chicago Press (email available below). General contact details of provider: https://www.ntanet.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.